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They claimed that changes in technology mean the proportion of messages that can be followed by the GCHQ listening station for MI5 and MI6 is now 75 per cent – down from 90 per cent in 2006.

But Mr Clarke and Mrs May were accused of seeking to drum up support with ‘spurious’ claims that failing to back secret courts would lead to terrorist suspects being granted British passports.

In the letter the ministers said that without their proposals ‘the Government is unable to fight the case and may have to allow British citizenship to an individual believed to be engaged in terrorism-related activity,for example, because the courts have no secure forum to handle the appeal process.’

But critics pointed out that secret hearings are already allowed by the Special Immigration Appeals Commission.

The letter made no mention of secret
inquests or ministers taking charge – hitherto centrepieces of the
Government’s plans – paving the way for a rethink.

Under
the secret justice proposals, defendants or claimants would not be
allowed to be present, know or challenge the case against them and must
be represented by a security-cleared special advocate rather than their
own lawyer.

But
last night a senior source close the negotiations told the Mail that
Ken Clarke is prepared to back away from allowing secret justice, except
in a ‘tiny’ number of terrorism cases.

‘There
will be a U-turn. Inquests are seen as one area where we can give
ground. You’ll see a staged withdrawal. It’s also pretty much a done
deal that we will move to judges not ministers deciding this stuff.’

Deputy Prime Minister Nick Clegg threw a spanner in the works when he said he would not back plans for secret coroners’ courts.

Now
officials are looking at ways of ensuring that only ‘very small parts
of a tiny number of hearings’ would be held behind closed doors.

For example, if operational military information needed to be disclosed in the inquest of a soldier killed in Afghanistan.

Open: The Royal Courts of Justice, London. A U-turn by ministers would be a significant step in the fight to maintain transparency in the British justice system, ruling out plans to allow inquests to be held in secret

‘Military families know there have to be secrets,’ a Ministry of Justice source said.

‘But
in the next few weeks we will settle the question of coroners’ courts
to ensure that families of servicemen are not denied proper and
transparent justice.’

A
Downing Street source made clear the Tories are prepared to cut a deal
with Mr Clegg that would dramatically water down plans to demand secret
inquests.

‘I
don’t think we’re all that far apart,’ the official said. ‘We are in
the territory of providing safeguards.’ Mr Clarke and Mrs May also
sought to claim that the Coalition’s plans were very different from
Labour plans before the election which the Tories opposed.

But Tory MP Dominic Raab said: ‘The plans are identical to the Labour proposal I was briefed on in 2008.’

Senior
right-winger David Davis said: ‘What are they talking about? They are
deluding themselves if they think a tactical retreat is going to be
enough. Their argument over inquests has already been lost, partly
thanks to the Daily Mail campaign. But we won’t back down until they
drop the plans entirely.’

Shami
Chakrabarti, director of Liberty, also vowed to fight to the end:
‘It’s the oldest trick to start with such an outrageous proposal that
even a minor tweak seems more reasonable.’

Beefed up: GCHQ, Cheltenham, where under plans defended by Clarke and May, intelligence services would be given more powers to snoop on the public's internet communications

Not a word in defence of closed inquests

JAMES SLACK'S ANALYSIS

Relations between Kenneth Clarke and Theresa May are permanently strained. So, when Tory MPs received an unsolicited letter signed by both Cabinet ministers yesterday, they knew the Government was feeling the heat over the civil liberties row.

Over four pages, the pair set out their case for secret courts and forcing internet providers to store details of everybody’s internet use and phone calls.

In the febrile Westminster village, some questioned the significance of more space being given to defending the snooper plan, which was covered by the first two-and-a-half pages.

'Many MPs consider this idea simply indefensible - and Nick Clegg wants it scrapped. Now it could be dumped within weeks'

Does this signify that, if one piece of legislation must be sacrificed, it will be secret courts? Most likely ministers will continue with both, while making concessions on the way. One breakthrough which now seems likely is the demise of secret inquests – probably the most terrifying proposal of the lot.

Certainly, it’s notable that not a single word was offered in defence of holding inquiries into police shootings and military deaths behind closed doors. Many MPs consider this idea simply indefensible - and Nick Clegg wants it scrapped. Now it could be dumped within weeks.

Yet MPs point out there is no letting up in the propaganda war over other aspects of the Government’s proposals. Of the snooper plan, the letter says: ‘Despite what has been claimed, this is very different to the scheme proposed by the last government.

‘They wanted to build a Big Brother database with all communications data held in one place by government. Under our proposals, there will be no government database and the data recorded will be strictly limited and regulated and will be destroyed after a year.’

This is disingenuous. Labour did originally have a plan for a giant database, but this was junked long before the proposals were formally published.

The scheme they wanted was near identical to the current Coalition plan – and Labour and the Tories opposed it.

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Climbdown on secret inquests: Victory for the Mail's open justice campaign